As the 2009 presidential election approached, Iran faced a period of intense political turmoil. In the run-up to the election, a power struggle developed between key individuals critical of Pres. Mahmoud Ahmadinejad and those who supported him. Ahmadinejad, aligned with the country’s Revolutionary Guards, was confronted by an array of reformists, clergy, conservatives, and progressive intellectuals who hoped to ensure his defeat in the election scheduled for June 12. As the election drew closer, Ahmadinejad’s opposition coalesced around one main challenger, Mir Hossein Mousavi. For the first time, the hierarchy of the Islamic Republic was split in public on the course of future action.

As a result, the election outcome was expected to be close. The announcement on June 13 that Ahmadinejad had won outright was therefore greeted by many with surprise. Official results indicated that the turnout was 85% but that only 34% of the vote was won by Ahmadinejad’s chief rival, Mousavi, who demanded that the results be investigated. The failure of Supreme Leader Ayatollah Ali Khamenei to respond to election irregularities led to a week of unrest among those frustrated by Ahmadinejad’s dubious success.

On June 19 Khamenei issued a public call for unity but also increased police and Basij militia antiriot action against demonstrators. In July the riots gradually abated, but agitation for a new election remained. Nevertheless, Ahmadinejad was sworn in as president on August 5 with Khamenei’s blessing. The rupture caused by the disputes damaged the cohesion of the ruling elite, making Iran politically less stable in spite of declarations that no erosion had occurred in regard to the principles of the Islamic republic.

Political maneuvering continued after the midyear unrest with neither side entirely dominant. Ahmadinejad won control of most ministries in the new cabinet, although there were areas that were taken over by opponents. Among these were the judiciary, which was headed by Sadeq Larijani, the brother of Majles (parliament) speaker Ali Larijani. Talks between Khamenei and former president Hashemi Rafsanjani in August brought relief from overt in-fighting within the regime, but dissatisfaction with Ahmedinejad’s election remained.

The unity of the regime was again severely tested when the death of Grand Ayatollah Hossein Ali Montazeri, who had opposed the election results, was announced on December 19. The event sparked further uprisings on the streets of Tehran on December 27 in which 10 protesters were killed. The government was much taken aback by this recurrence of violence and by the size of the opposition clustered around Mousavi, whose nephew was among those killed during the riots. There was no sign at any stage that the regime would change the decision concerning the legitimacy of the election, however.

In November, five individuals who had been detained in the wake of the election were convicted of armed opposition to the regime and sentenced to death. Mohammad Ali Abtahi, a leading reformist and former vice president, received a six-year prison sentence on charges of fomenting unrest but was released on bail pending his appeal. Small-scale incidents of unrest in outlying provinces also confronted the regime. Activities by insurgents and bandits arose in Kordestan and Sistan va Baluchestan. Tourists were recommended not to travel in border areas adjacent to Iraq, Afghanistan, and Pakistan.

The political unrest in June and July interrupted a slight easing of relations with the U.S. Although U.S. Pres. Barack Obama had sent a Noruz (New Year) message to the Iranian people and had offered wide-ranging diplomatic dialogue with the regime, the harsh treatment of peaceful demonstrators following the elections evinced a sharp rebuff from Obama.

The U.S. also claimed a direct role in negotiations over Iran’s nuclear program. Secretary of State Hillary Clinton responded to Iran’s continuing failure to desist from developing nuclear capacity and promised U.S. protection to the Arab states of the Persian Gulf against any Iranian threat. The meeting of the UN General on September 24 endorsed Obama’s proposals for an end to the proliferation of nuclear weapons.

The International Atomic Energy Agency proposed a plan in which low-enriched uranium from Iran would be further enriched in France or Russia. Iranian negotiators appeared to accept this proposal in November but demanded that the processing be completed on Iranian soil. Iran continued to play a waiting game, however, and the deal ultimately collapsed, though reports suggested that further talks would continue. The U.S., meanwhile, prepared the ground for the imposition of more severe sanctions against Iran.

Nevertheless, Iran pressed on with its nuclear program, including plans to inaugurate the Bushehr atomic power station, expand capacity at Natanz, and secretly create a new underground facility near Qom. Negotiations with the EU toward external monitoring of the nuclear program made little progress. Ahmedinejad’s government continued its support for militant groups such as Hamas and Hezbollah, adding to friction with the U.S., the EU, and Israel. Relations with the Arab states, particularly Egypt and Saudi Arabia, were poor. Russia maintained a friendly diplomatic front and supplied armaments and equipment for the Bushehr complex. Limitations to Iran’s ambitions multiplied considerably and, other than having close relations with Libya, Syria, and Iraq—together with some shared commercial interests with China and Russia—Iran was diplomatically isolated.

Discontent with the Ahmadinejad government, caused partly by its poor economic performance, contributed to the June rioting. Economic growth registered about 6% but was declining. GDP stood at $344.8 billion in March, with per capita income about $4,837. Inflation ran at some 25% during the year. Meanwhile, the oil sector’s earnings totaled $81.2 billion but were scheduled in the 2009–10 budget to decrease to about $30 billion–$36 billion as the oil price dipped on the international market. The impact of the international financial crisis on Iran was appreciable. The Ministry of Petroleum claimed that more than 50% of the investment program was frozen owing to shortage of funds. The unemployment rate exceeded 10%.

The annual budget expenditure was reduced to $298 billion. A key reform expected to be introduced in the 2010–11 budget was a contentious plan to gradually eliminate subsidies on fuel, foodstuffs, and medical equipment. With an estimated 14 million Iranians living below the poverty line, economic reforms were a sensitive political matter.